July 2, 2013 EUR/USD, GBP/USD Analysis
We start another day with no clear direction on the EUR/USD pretty much as I expected with it being a big news week. It sure looks like there is a concerted effort to push traders out of the market since we see that three of the 5 levels I had on the chart were tested and then run back knocking out the traders that got in at those levels. I could say that its a potential first intraday push to the upside but I will be remaining on the side of caution and looking to the key levels and manipulation to take a trade today. If I do get a good entry I wont be holding for a longer run and will be happy with a 40-50 pip trade.
The levels I will be looking for the short are 1.3086 or the 1.3102 level that is also a daily high coinciding with the hourly 200 EMA which will be the best place. Since its rather far from current price action it may not make it there which makes the 1.3086 a good level also considering it is also a daily high that has shown they didn’t want price to reach much further. There is really only one good level for a long I see at 1.3052. However with its close proximity to price I would want to see the push up to expand the Asian range and then come back for the stop run during the London session. If it does manage to make the drop during Asia this morning then the 1.3029 and 1.3020 are also possible manipulation areas for a long with the 1.3020 having the highest probability. The set up will need to be clear at these levels with the daily low just below.
The GBP/USD made a feeble attempt at the reversal and remains in the third push chop for now. The best way to determine direction today will be to wait for an hourly conviction close beyond yesterdays high or low. Of which we may not get until we see some of the big news behind us this week. I will be happiest to see the break above the highs at 1.5247 since the next level it will test is further away at 1.5274 along with the fact its in the direction of the reversal we haven’t seen yet. Even if they do intend to push it down I always expect them to flush out traders with a false push first and a nice push above the 1.5274 will do that.
I will also point out that the 1.5200 level I mentioned in yesterdays commentary has held up nicely again and does have potential for the long. However with price in such close proximity I will need to see something to the effect of playing the breakout traders to the high of the Asian range first. Then do the same with some clear manipulation at the lows testing the 1.5200 level. There is also the chance for the aggressive short with a stop run to yesterdays highs but I will need a good entry and if we see the hourly close above I will close break even or with a small loss and wait for the long entry.
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Forex News Today
As I look at the calendar today it makes me think we wont be seeing any conviction since the news starts to ramp up tomorrow with ADP Nonfarm then Thursday the BOE and ECB have their day in the sun. Should be interesting when Carney steps up to the plate for the BOE. Then of course Friday Nonfarm payrolls. There is a UK 10yr gilt auction today that has potential to go bad but I highly doubt it. It will most likely go well and that may give us some conviction on the GU but we will have to wait and see. They also have Construction PMI expected to improve slightly but the way I see it is there will need to be a surprise drop below the 50 level to create much conviction, which is unlikely.
The US only has Fed member Dudley speaking. I doubt we will see much from that either. Maybe more of the no taper talk but that is probably expected so wont do much.
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